$Taiwan Semiconductor Manufacturing(TSM)$released 2022 Second Quarter Earnings on 17-July-2022, another excellent quarter. As we can see from the summary from TSM earning presentation, revenue, gross margin, operating margin and net profit margin were all better than previous quarter. Furthermore, they are guiding third quarter revenue to be a 11.2% sequential increase at the midpoint.
TSM expecting the excess inventory in the semiconductor supply chain to take a few quarters to rebalance to a healthier level, likely through first half 2023. Though they observe softness in demand of consumer end market segments, other end market segments such as data center and
automotive-related remain steady. They expect their capacity to remain tight throughout 2022 and their full year growth to be mid-30% in U.S. dollar terms.
Their N3 is on track for volume production in second half of this year with good yield. They expect revenue contribution starting first half of 2023. Meanwhile, their N2 technology development is on track and progressing well with risk production schedule in 2024 and volume production in 2025.
They anyway will face challenges from rising inflationary costs from raw materials, utilities and tools, increasing process complexity of leading nodes, new investments in mature nodes and overseas fab expansions. But the management is confident about TSM's strength in the foundry industry.
The effective tax rate for 2023 will be higher due to the expiration of certain tax exemptions in Taiwan. This will have some impact on the net profit, earning per share, but is not a big concern here. The demand for high-performance computing chips and the advanced technologies it has will lead TSM stock price to higher territory.
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